A Case Study Demonstrating the Importance of Utah Hard Money Lending

It is not unusual for me to discuss hard money lending with someone who asks for a real-world scenario demonstrating what hard money does. I’m always happy to oblige. As someone who writes about hard money in Utah, I have access to plenty of case studies.

Some involve Salt Lake City’s Actium Lending. The firm is known for writing Utah hard money loans within days of application – usually seven days or less. One of their more recent loans helped a borrower out of a bind at the end of last year.

Closing Before Year End

The borrower had his eye on property near Bear Lake, in northern Utah. His offer was accepted and he was ready to go. Here’s the thing: he wanted to close before the year-end. His reasons are unimportant for the purposes of this post. But what is important is the fact that his original lender could not get things done before the year was out. So he contacted Actium.

Once presented with the opportunity, the Actium team decided it was worth pursuing. They sent a representative up to Bear Lake – in a snowstorm and on a Saturday, no less – to inspect the property.

On Monday morning, the team did its due diligence. They talked to local officials about zoning and utilities. They approved the loan and began working on the documents. The documents and funding were sent to the title company shortly thereafter, facilitating closing and allowing the County Recorder to take care of its part of the transaction as soon as the office was open. Everything was done on time.

The Property Was Valuable

If you are new to Utah hard money loans, you should know that Actium’s reason for inspecting the property was different than what you might expect. A bank appraises a property before writing a mortgage to ensure that it is worth what the buyer is paying for it. Hard money lenders inspect properties to ensure they have enough value to cover the amount being requested.

Firms like Actium inspect properties because their lending is asset-based. They are not so concerned with the borrower’s credit history or score. They don’t care much about debt-to-income ratios. They do not ask for pay stubs, tax documents, profit and loss statements, etc. The only thing they want to know is whether the property being acquired has enough value to cover the loan. That’s one of the reasons they can approve and close in days rather than months.

How They Work So Quickly

Applying for a commercial loan and having it approved and funded in days is unheard of in conventional lending. Banks and credit unions simply cannot move that quickly. They aren’t set up to do so. Because of the restrictive environment in which they work, banks typically need 90 days to do what they do. So how do private lenders work so quickly?

Although private lenders are regulated, the rules they must follow are quite a bit different. They are able to utilize a more streamlined underwriting process that basically cuts out the bureaucracy and the need for excessive documentation. As long as a borrower provides the necessary documents along with his loan application, decisions can be made in hours. Funding can be accomplished in days.

Hard Money Makes Commercial Real Estate Investing Work

Hard money loans in Utah are extremely important to real estate investors. They make investing work. Without them, properties like the Bear Lake recreational site wouldn’t be accessible to all investors equally. Only those with the resources to pay all cash would have a shot at the best opportunities.